REITs or Real Properties Investment Trusts tend to be popular among investors looking for investment income and hedge against inflation. REITs can be solid performers in an inflationary environment due to their ability to increase rents and then pass that income on to shareholders. Studies show REITs have historically provided protection against inflation and outperformed the broader stock market during rising inflation. Moreover, REITs are required to pay out 90% of their taxable income to shareholders in the form of dividends, helping to ensure a reliable stream of income.
The sky-high inflation coupled with the rising interest rates and market volatility is making investors anxious. According to Moody’s estimate, the soaring inflation is costing U.S. households an extra $327 per month as of March 2022. Additionally, the consumer price index rose 8.3% on the headline and 6.2% on the core on an annualized basis last month. On the other hand, Federal Reserve Chair Jerome Powell emphasized his resolve to get inflation down. “If that involves moving past broadly understood levels of neutral, we won’t hesitate to do that,” said the central bank leader.
